Dry lending is an aspect of private bank mortgages and lending to high net worth individuals.
It means that bespoke mortgages are available without requiring any investment assets to be placed under the bank’s management.
The wealth and income of high net worth individuals is considered, with their assets being recognised, regardless of where they are located. This type of lending gives individuals more control over their repayment terms and rates, allowing them to make the most out of their financial situation. Private banks, commercial banks and specialist lenders all provide this type of financing, giving clients more options than ever before.
When it comes to taking out a HNW large mortgage, there are two options lenders offer:
The first is AUM (Assets Under Management), which is common for private bank mortgages. Lenders will require other assets from you to be placed under their management, such as stocks, shares and cash. With an AUM mortgage, lenders may be able to offer you a higher loan-to-value (LTV) or larger income multiple than with a standard mortgage.
The second option is dry lending. Here, the lender only takes security over the property being offered as collateral without needing any additional assets from you. This arrangement works in the same way as a traditional mortgage and provides similar terms and conditions.
